The owner of an apartment (also referred to as a “unit”) in a cooperative apartment building (“co-op”) must be aware of several matters relating to the sale of the unit.
Most unit owners are permitted to sell their unit to anyone they choose. However, the owner should be aware of any special rules relating to the sale of the unit to others such as restrictions on shares or rights of first refusal.
2. Pay-off of mortgage
If the unit owner has borrowed money, using the co-op unit as collateral, then a “pay-off” statement should be ordered from the lender. Also, unlike a mortgage upon real estate, the lender or its representative must be present at the closing (because the lender has typically taken the actual shares of stock and proprietary lease into its possession at the time of the loan).
If there are any liens against the unit owner, ranging from tax liens to judgments to home equity lines, those liens must be paid at or before the closing. The buyer’s attorney will send a judgment/lien search to the seller to identify any such liens to be cleared.
4. Flip taxes
Some co-ops impose a “flip tax” or transfer charge upon the seller of a unit. These flip taxes can be based upon a percentage of the sale price, flat amount, percentage based upon the difference between the original purchase price and the sale price, or some other computation. The unit owner should find out what those flip taxes will be before selling the unit in order to ensure that the sale price will cover the flip tax, along with any other charges or liens to be paid at the closing.
5. Original documents
Unless the unit owner has a lender, who is holding the shares of stock and proprietary lease in escrow, then the owner must locate and produce the originals. If they have been lost, duplicate originals can be drawn.
Once the creditor has obtained a Judgment from a court, the collection process has now begun. In the context of collecting the money due on the Judgment, it may be necessary to “docket” the Judgment in the County Clerk’s Office.
In each county of the State, there is a court of general jurisdiction called the “Supreme Court.” In some counties, towns, cities, and villages, there are lower courts (such as Civil Court, District Court, etc.). Judgments entered in those courts are not automatic liens upon any realty that the debtor may own in the county. Rather, a “Transcript of Judgment” must be obtained from the court and filed with the County Clerk to create the lien. Once docketed, the Transcript of Judgment will serve as notice to others that there is a lien upon any realty owned by the debtor; other parties are now aware that the lien must be paid according to its priority.
Judgments entered in a Supreme Court case are automatically docketed with the County Clerk.
Unlike New Jersey or some other states, which have state-wide recognition, the Judgment must be docketed by the filing of a Transcript of Judgment in each county in which the debtor has realty in order to create the lien.
The docketing of a Judgment is also essential when attempting to issue an Income Execution to a County Sheriff in another county (where, perhaps, the employer of a debtor is located). Another purpose of docketing a Judgment may be where the Judgment was entered in federal District Court and the creditor wants to use a Sheriff instead of a United States Marshall.